In March, GM worked out a deal with Delphi, its largest parts supplier, and the United Auto Workers that allows the automaker’s 113,000 UAW-represented hourly workers and 13,000 of Delphi’s 23,000 UAW workers to receive $35,000 to $140,000, depending on their seniority, if they retire early.
GM estimates that more than 20,000 have taken the offer and anticipates that a total of 30,000 will accept the buyouts by the June 23 deadline, allowing the company to cut its legacy costs—at least a bit.
But now GM has a tricky task: To avoid production shortages caused by the buyouts, it has to find temporary workers to replace its departing skilled employees.
Finding workers shouldn’t be a problem, but getting the needed skills may prove challenging, says Robert Chiaravalli, a labor lawyer and principal at Strategic Labor and Human Resources in West Bloomfield, Michigan.
This is a growing challenge for all of the Big Three automakers as they adopt a just-in-time production model. The approach lets them increase and reduce production in line with demand, says Paul Seymour, vice president of business development of ResourceMFG, a staffing company that specializes in manufacturing. ResourceMFG is a subsidiary of EmployBridge.
"The skilled workers are retiring and not a lot of graduates are taking their place," he says.
Traditionally, automakers like GM tap UAW members’ friends and family to fill temporary vacancies, such as those created when employees take off for summer vacations and long holidays. But some of those workers may not be willing to go to GM now because they know there is little chance for the jobs to turn into full-time positions, experts say. They note that full-time positions will most likely be filled by those GM and Delphi workers who are currently in the JOBS Bank, a sort of paid holding pattern for laid-off workers.
On the other hand, making $15 an hour is still a good wage in Michigan these days, says Arthur Wheaton, a workplace and industry education specialist at Cornell University.
"The temps may not be making the $27 an hour that the GM full-time employees are getting paid, but what’s the alternative?" he asks.
To address the skills shortage, GM needs to forecast at which plants this is going to be an issue. It needs to make sure there are programs in place to address the problem, Chiaravalli says.
"They need to stay ahead and predict which skill sets are going to be in demand," he says.
Then GM needs to make sure that it creates processes for its departing workers to transfer their knowledge and skills to temps and new employees, Wheaton says. "This will cut some of the training costs," he says.
One smart move by GM is language it included in the buyout contracts. The company reserves the right to keep employees until January 2007, Wheaton says.
"That gives them time to transfer some of that knowledge over to the new and existing workers," he says.